Unfunded Pensions Are Our Doom

Posted Nov 25, 2013 by Martin Armstrong

The standard pension systems of governments from Europe to the States are all the same. They have assumed that taxes would be an endless pit. They have promised pensions to people and never funded them. Anyone in the private sector would go to jail for creating such schemes. Historically, the people rise up when they realize they have been fooled once again by government. In England, they too are discovering the same system that collapsed Detroit is alive and well there also. The Daily Mail has reported that 25% of all taxes in a municipal council go to pensions. They cannot see that operating in this fashion will cause and economic implosion. For every person who retires, they must hire another. This is sending taxes higher and the cost of government to double within the next 10 years.

Those who have claimed there would be hyperinflation assume that government can and will simply print money to cover the expense. But state and local government cannot print money. The majority of governments are in a massive collapsing spiral and this is DEFLATION for as taxes rise, disposable income declines, and eventually they cannot collect in taxes what they need to keep the game afoot.

When this type of system came to a head in the city of Mainz during the 15th century, they chased all the producers out by raising taxes and were left with a gutted economy much like Detroit. Mainz had been the birthplace of the Guttenberg printing press and this created a huge economic boom. The politicians thought this would never end and spend more than the future could pay.

•By 1411, gov’t expenditure. 48% due to annuities it had issued.

• By 1437, gov’t expenditure. 75% was going to the creditors and interest rates continued to rise.

• By 1448, Mainz was forced into bankruptcy when there were no longer buyers for its debt.

The City of Mainz defaulted on their debts. The foreign holders of their debt sacked the city and then burned it to the ground. Government is incapable of ever designing any system when it comes to money. Social Security in the States is the same system. Look at Obamacare. There is nothing government is ever capable of doing that ever honestly benefits society in a fair and sustainable manner. We need serious structure reforms and the recognize that government has to be restrained to save society from self-destruction.